15:41 - 28.08.2024

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August 28, Fineko/abc.az. The Central Bank of Azerbaijan is considering the possibility of selling foreign currency from its reserves, as stated by Elrad Seydiev, Director of the Financial Market Operations Department, in an interview with Report.

"Considering the potential threats posed by excess money supply, the Central Bank is exploring the option of conducting currency auctions using its own reserves to sterilize manat liquidity, depending on the situation in the foreign exchange market. This will satisfy the state's demand for foreign currency expenditures," noted Seydiev.

According to him, the Central Bank's foreign exchange reserves have been growing in recent years. "The Central Bank's foreign exchange reserves are influenced by interventions in the foreign exchange market and income from reserve management," he added.

In 2022-2023, the Central Bank's net purchase of foreign currency in the market amounted to $4.2 billion. This means that supply exceeded demand in those years, and the Central Bank purchased $4.2 billion due to lack of market demand to prevent upward pressure on the exchange rate. As a result, the Central Bank's foreign exchange reserves increased.

Purchase-oriented measures had an upward impact on the manat money supply in the equivalent amount (over 7 billion manats in 2022-2023). Under these conditions, the Central Bank uses sterilization operations with its instruments (mandatory reserves, standing facilities, and open market operations) to avoid excessive expansion of the money supply.

As of August 1, the Central Bank's foreign exchange reserves stood at $11.7657 billion, up 0.2% from July 1. Reserves have grown 1.3% since the beginning of the year and 27.3% over the past years.